"I give him pardon," said Musharraf, who is also the army chief, at a news conference in his camp office in Rawalpindi near Islamabad.

Khan on Wednesday admitted leaking secrets and begged for forgiveness following a lengthy investigation into the alleged transfer of nuclear technology to Iran, Libya and North Korea.

But Musharraf, dressed in his military commando uniform, called the scientist a "national hero" for bringing the bomb to Pakistan, seen as a vital part of the country's defences against India.

Musharraf said Khan had merely made "mistakes" and that he had decided to pardon him because of his services to enhancing national security.

"A.Q. Khan is my hero, he is still my hero because he made Pakistan a nuclear power... This hero has given us respect and survival."

However, he said "it is a sheer sorrow that when we explored the evidence, we found that he has made mistakes.

"I cannot save a hero and destroy the nation," said Musharraf in an emotional tone.

White House spokesman Scott McClellan said the United States was pleased with the steps Pakistan had taken.

"The government of Pakistan was not involved in any kind of proliferation activities. We value those assurances and (Musharraf's) actions since he made those assurances demonstrate his commitment to the issue of proliferation," the spokesman said.

Analysts had earlier said the matter would not go to trial because the government wanted to avoid awkward facts coming to light.

The government has repeatedly stressed that the nuclear scientists, five of whom have been arrested over the leaks, acted without the knowledge of any officials.

CIA Director George Tenet said Thursday that daring US and British spies exposed Khan after penetrating his covert nuclear smuggling ring stretching across three continents.

"Our spies penetrated the network through a series of daring operations over several years," said Tenet in a speech at Georgetown University designed to defend the Central Intelligence Agency's data used to justify the Iraq war.

"Through this unrelenting effort, we confirmed the network was delivering such things as illicit uranium centrifuges."

In Vienna, IAEA chief Mohamed ElBaradei said the revelations by Khan about the network just the "tip of an iceberg" of such illegal trafficking.

"Dr Khan is the tip of an iceberg for us," he said

Khan "was not working alone," said ElBaradei, speaking on the sidelines of a conference on nuclear non-proliferation.

"We need to follow this through. We need to know who was producing centrifuges" that can be used to make highly enriched uranium for atomic bombs.

"We have to make sure it will not be repeated."

Musharraf stressed that "no military or government official was involved" in the leaks and said Pakistan would not give up its nuclear weapons.

"This country will never roll back its nuclear assets and its missile programme. This can never be done, this is my promise," he said.

Musharraf issued the pardon after Khan submitted a mercy petition to him and a special cabinet meeting called by Prime Minister Zafarulla Jamali Thursday recommended clemency.

Khan's revelations have embarrassed Musharraf, a key ally of the United States which has included Iran and North Korea in its "axis of evil".

The investigation was prompted by information from Iran passed on by the

Musharraf said the IAEA saw Pakistani-designed centrifuges during inspections in Iran last year, and more information was given by Libya.

He said 11 people were engaged in the leaks including Khan.

Pakistan's opposition parties have alleged nuclear scientists have been made a scapegoat and demanded independent investigations.

An Islamic alliance, the Muttahida Majlis-e-Amal, which has previously backed Musharraf, called for a countrywide strike on Friday to protest against what it called the "humiliation of nuclear scientists."

WAR.WIRE